Payday lenders must be better regulated

We appreciate the recent efforts of the Planning Commission and Rock Hill City Council to utilize zoning regulations as a tool to reduce the rapid growth of payday lending businesses. Unfortunately, state legislation efforts to restrict the number of loans and maximum interest rate to 36 percent per year have been largely unsuccessful. North Carolina and Georgia passed laws banning these businesses which led to their explosive growth in South Carolina.

In a recent Herald article, Jamie Fulmer of Advance America questioned whether you could ban fast- food providers because they are bad for your health. In response to public criticism concerning high fat menus, fast-food restaurants expanded their options to include healthier alternatives. Hopefully, payday lenders will follow this example to provide "financial health" options, including local access to credit counseling for their clients.

Mr. Fulmer also mentioned payday lenders are one of the tools used by individuals in need of short-term cash. However, with no restrictions, these businesses prey on the "buy now pay later" myth that many consumers believe can move them into a positive cash position. Sadly, one paycheck is rarely enough to overcome the cash crisis resulting in a cycle of loans from nearby payday and auto title businesses. By keeping the loan amounts under the existing $600 limit, payday lenders are not governed by typical lending regulations, allowing the accumulation of fees that would compare to interest rates of up to 390 percent over one year's time.

Fortunately, the business community has responded to the challenge to provide competitive loan services. For example, Family Trust Federal Credit Union has developed a new program in which a percentage of the loan is deposited into the individual's personal savings account. The individual may find that with repeated short term loans, they have saved enough to eliminate the need for another loan.

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The escalation of debt due to the growing cycle of personal loans will certainly overwhelm our local crisis resources. Our providers currently face empty shelves in their food pantry and minimal amounts in their rent and utility assistance funds. The challenge for our community is to find solutions and support to help break the cycle of poverty that does exist in our community.

United Way of York County realizes debt is a serious problem for our local residents. Information gathered through our Community Needs Study revealed that "Can't get out of debt" was the second-highest identified need in the telephone survey completed by Winthrop University's Survey Lab led by Scott Huffmon. In addition, "Not enough money to pay for medical insurance... medication... doctor's office visits" were the top four community needs identified. Not surprisingly, "much anxiety, stress or depression" was the seventh on our priority list.

New programs

United Way of York County has taken deliberate steps to build collaborations and strategies to address priority issues in our community. Increasing awareness of and accessibility to local resources has been the challenge of our newly developed Community Impact Teams. As a result, a York County Resource Guide has been compiled that will be the foundation for the 2-1-1 Information and referral line that will be available to York County residents this fall. Calling 2-1-1 will give individuals 24/7 access to local information and referrals they need to overcome life's challenges, but also provide resources and tools to build success skills for life.

We are committed to providing more than short-term solutions for people who face challenges in life. We are offering more than rhetoric in creating dynamic and active solutions through education, awareness, prevention and intervention through our 41 agency partners and over 62 local programs that build our community to be the best it can be.

Two of our Impact Teams -- Meeting Basic Needs/Building Self-Reliance, and Preparing Families for Success -- are working to determine county level indicators of success on our most urgent problems.

The burden of debt

One of those problems continues to be the role debt plays in a host of social concerns and issues. While certainly debt alone does not destroy families and lives, it contributes to the overall level of stress that a family or individual experiences. Without education and a realistic path to walk, many families will continue to be caught in a downward economic spiral that only intensifies other problems.

We are concerned that payday lenders are not regulated to the same degree as our financial institutions. We want our state to take a stand for the citizens who become caught in a vicious cycle by these short-term lending practices. Our advocacy for those in need will hopefully result in increased public awareness and produce strategies to improve the quality of life for all who live and work in the community that we call home. We seek to understand and then to be understood. We give a voice to those often not heard.

We applaud and salute the Planning Commission and Rock Hill City Council for putting the interest of our residents first and sending a strong message that we will not turn our backs on those in need.